tv On the Move With Rishaad Salamat Bloomberg January 19, 2015 8:00pm-10:01pm EST
>> live from hong kong, you are watching "on the move to go -- "on the move." half an hour to the open in shanghai, will the route get worse? more money in fewer hands. the wealth gap warning from oxfam. and the pain in the oil patch. hsbc says it is going to deepen. market wise, we have 30 minutes to go before the open. malaysia just coming on stream
and taiwan in the next. david is having a look at general sentiment. we saw wall street client, and that normally has an impact here as well. >> we are expecting volumes to be fairly light over the next hour. gdp of china comes out midmorning. meantime, this is what we're seeing across the region for taiwan, malaysia, and singapore. the cost be up 0.4%. we are seeing a drop in the japanese yen. i will show you what is happening in just a moment. top performer, the nikkei 200 205 -- the nikkei 225. the dollar is softer. it spiked in the last few minutes or so. dollar-10 climbing up as well. -- dollar/yen climbing up as well.
a huge move down yesterday, 17% drop in 10 year yields. i think we're seeing a bit of a rebound today. food prices, we are below 48 for the new york knicks. as you can see, brent is below 49. that is obviously weighing on stocks. in australia, that sector group is getting hit the most. oil and gas down 2%. a big move down on oil prices. iraq the latest in terms of news. record output weighing on the outlook for supply. there is a glut. obviously not helping the case for higher oil prices, as you can see on the asx 200. >> let's look at crude at the moment.
thanks for that, david. let's look at what the impact is . following currency -- shrinking. hsbc says there is more on the way. >> we are expecting an across-the-board squeeze for crude sort of a snowballing with hsbc saying that well-funded public spending will fall. investment will fall. consumption will fall. all of that affecting these crude exporting countries such as russia, saudi arabia. in october, estimates have put economic growth in 13 european and middle eastern countries to a growth about 2.6%. now analysts saying that will be revised down to 1.8%. russia the hardest hit shrinking three point 5%. saudi arabia will grow 2.8%, but there will be the slowest gain
since 2009, and their budget deficit, 11% of gdp. before hsbc was expecting a surplus. >> crude exporters taking a hit. we're talking about russia and the middle east. not that many losers in asia. but there is one, and we are talking malaysia. >> because they are a net crude exporter. the oil and gas products take up about 22% of their exports, 30% of their state income from energy. lunging prices have put the malaysian fiscal situation at risk government plans to reduce a fiscal is at risk as well. the prime minister addressing the public in about an hour to talk about this issue. he said yesterday that he will probably announce interventions and adjustments needed to face the new situation. >> how bad will it get if the oil price remains at the levels?
>> the budget deficit -- the budget as a whole -- that budget was drawn up while oil was still topping $100. so far this year, it has averaged $50. below $60 analysts say malaysia is not going to achieve its target of reducing the budget deficit to around 3% of gdp. the good news is that the prime minister is getting some fiscal breathing room. now they are abolishing this decade-old energy subsidies that are removing -- those fuel subsidies being removed will save them about $3.4 billion. they are introducing a goods and services tax in april that is going to help the economy. >> let's look at what is going on with these oil companies having a look at the oil sector.
looking at what else is going on, including the movers and japan. >> potential big deals we are watching closely. a company confirming we may actually see or they are considering, this investment. a group is considering putting in a massive amount of money, $8.5 million according to the nikkei newspaper, into the china pacific group. eight point $5 billion, about a 12% stake. pacific shares are halted in trade today. why would they do this? we could see for the partners of citigroup -- of cp group increased access to regulated industries in china, for example. watch that closely. we are down 3%. obviously, the market does not think it is a good idea. it really big move for the
computer maker, with a nine-month net at -- net income -- ts tech makes car seats seats for cars. 27.45 is your price right now. 3500 is what jeffrey is saying. gold discovery, according to the company at this ballot prospect -- polar bear. mccourty group now with earnings yesterday. a good chance to add. rio tinto out with output for the fourth quarter. we are talking 12% increase in iron ore output. production is a little lower than estimates. we are talking 70 million metric tons. the analysts were at 82.
obviously, adding to concerns of a glut when it comes to iron ore. back to you. >> absolutely. underlining at all was the aussie dollar. more decline. the currency may fall as much as 15%, looking at about 70 u.s. cents. this is the lowest prediction of all the analysts we have been talking to. this has hit cotton and -- copper and iron ore. trading near its lowest in years. the european central bank preparing its big push to prevent deflation. economists expecting mario draghi to announce a bond buying program that is 10% bigger than initially anticipated. anticipation sending the euro to an 11 year low last week. shanghai has retained its title as the world's busiest container port the fifth year running. it push further ahead of
singapore, estimating more than 35 million containers processed last year. that compares to 33.9 million. there are large investments to meet demand, with the imf saying global trade grows about 3.8% in 2014. it is the time of the morning when we checked the prospects of the session in india. the futures contract getting underway in singapore. it seems like it is sepulchral. pretty much flat on that contract. we did manage to close out the session monday up by about 0.4%. still on the way, a look at what may be next for chinese stocks. the shanghai composite the most in six years. -- plunged the most in six years. ♪
>> in less than an hour, we get gdp out of beijing. economists expecting the slowest full-year growth china has witnessed since 1990. a very good morning. minister the expectations. >> -- run us through the expectations. >> i can run you through the topline numbers. bloomberg surveyed the economist, and taking the consensus estimate we explain -- we expect gdp to grow 7.2% the slowest quarterly growth we have seen since the financial crisis in early 2009. we are getting your today gdp numbers. if the estimates are right growth will miss the government full-year target of 7.5%.
it will also be the slowest full-year growth since 1990. what really matters with this round of gdp data is, where is this gross pay -- growth base? are we seeing jobs and wages staying strong? are we seeing overheating, overinvestment? if you look at these sectors those numbers do not look so bleak. >> certain components of the economy do well. you have had performance take up, job growth stay stable. there are parts of the economy that are not getting worse, and that is important when you look at the stimulus question. >> was also important is how many inflation numbers we will likely be seeing next month. so far, slow inflation growth has been a blessing for the central bank, has allowed them to use targeted using to try to channel money into the area. we could see more spending and investment. disinflation potentially heading into deflation.
even that, according to our guest, is not necessarily cause for alarm. lower oil prices could become a stimulus for the economy. so it should not spur them into anything rash. we will be getting a press briefing shortly after the first numbers are out at 10:00 a.m. local time, with some of these details. we also expect december and full-year retail sales to show good production, and fixed asset data around the same time. together, those will help us get a fuller picture of what the numbers mean this time. >> we will get more on this with a money manager in singapore. thanks very much for joining us. before we get to your expectations for growth, i want to ask you -- is this an economy addicted to stimulus? >> that is from a very short-term point of view. i think in terms of development. >> with that development comes
infrastructure spending and infrastructure investment as well, which in a way kind of distorts what is going on. >> infrastructure spending has been shifting away from the coastal areas to the western parts of china. i think if you look at what is happening in the center to the western part, you see infrastructure spending still pretty strong but not in the developed coastal areas of china. >> let's have a look at what you are predicting for 10:00 a.m. beijing time when these numbers are finally coming out. >> i don't think it matters because it is just three months. i think if you are looking at development, growth assets take 70 years.
three months is a very tiny portion of that process. i am not particularly concerned with what the number is at 10:00. >> let's quickly look at these chinese futures that have just come into play. they are signaling further declines stocks falling nearly 8%. yesterday, the biggest drop in six years. they are expecting a big draw here as well. what is going on here? we had that effective margin call take place. what is that telling you about liquidity in china? >> i think the rally was overdone. we got a 70% rise in about six or seven months. by any measure, that is really overdone. i think even if there had not been this curb on the margin,
the market by itself -- they already signed the rally was exhausted. it was due for a pullback. whether it is going to be 1% over a day or 8% over a day, this is a market that is still developing, still not sophisticated. this volatility is a feature of a developing stock market. >> do you foresee declines for a while, or a rapid got check before we stabilize? -- gut and check before we stabilize? quick the shanghai composite should probably go back to 2005, 2007, a little healthier than what it is now. >> we have export import numbers, the trade to the global economy doing well. how much of the global economy
is being given a lift from this lower oil price? >> in the longer term, there will be a lift. whenever there is a major asset price, whether it is oil or property or stock market -- whenever they change rapidly with -- rapidly within a short time there is always the worry that a lot of adverse impact from the rapid change. i think over the long term, over five or 10 years, the lower oil price will definitely be a boon for most economies throughout the world. what i think is not anticipated is, first and foremost, we see low price dropping to $20, for he dollars per barrel. i have been expecting that since last year. the major worry -- it is going to drop to $20 or $40.
the worry is it is going to stay low for the next few years. i think that is something the global economy has to adjust in the next 12-24 months. a lot of investment and economic growth in many countries has come from investments related to energy, whether it is traditional or modern energy. that would have an adverse effect first. the benefits would probably come in beyond maybe the next 24-36 months. don't forget i think the u.s. economy is still deleveraging. households are still trying to reduce that -- produced debt. and you are trying to maintain a savings rate is not too low. it is not like the 1970's, when oil price plunge suddenly and it was great for many developing economies. here, you have households that
are still in a pretty -- i would not say panicky situation, but they want to respond with their balance sheets. the oil price drop may lead to an offsetting growth in consumer spending. >> great having you on the program has ever, from capital dynamics. he is the founder and managing director. on the other side of the break, warnings that the world's widening wealth gap, with the top few tightening their control -- this is "on the move." ♪
>> about seven minutes to go before things get underway in china. hong kong also getting in the mix. pre-market, up by 0.25%. the futures contract pretty much unchanged. looking for a slight decline overall, perhaps. the shanghai composite had its biggest fall in six years. we are closely watching futures, which are indicating more of the same. keep an eye on things at the bottom of the hour. it is the richest versus the rest, as the well cap yon's ever wider. oxfam says the top 1% will control half the planet's wealth by next year. these numbers are quite staggering.
>> if you look at the wealth of the richest 85 people in the world, that is the same amount as the poorest half of the world's population, which is 3.5 billion people. pretty impressive. staggering. let's take a breakdown of the numbers real quick. the richest 1% actually own about 44% of global wealth in 2009, but look at that growth in the last couple years. in 2016, it will likely exceed 50%. ownership of global wealth. that is what oxfam told the world economic forum in dallas. $92 billion was added to the collective fortunes of these -- >> they are telling people in dow posts the richest people in the world? they are telling them to suck eggs? >> are saying governments need to start cracking down on
individual tax dodging. >> i think president obama is going to be dealing with some of this in the state of the union address. that is being rumored currently. china trying to do something about this as well. >> president obama is going to mention that in the state of the union saying he really wants to propose this tax on the wealthy. put the capital gains tax top rate of to about 28%. it is a raise from nearly 24%. in china, they say tax officials are actually starting to ask citizens to report earnings overseas. there is a new york times report saying these tax agencies have quietly started enforcing the regulations. >> are they talking about global taxation? >> there are apparently new rules that will ban international investments that are deemed to be tax shelters in china, according to reports right now. oxfam says they are still seeing people talking the talk, but not
walking the walk. >> we have this, at the moment, ever widening wealth gap. >> housing numbers have risen. average home price is 17 times how much a household makes. home prices also up 12% for the year. >> let's not forget in london and new york as well it is ridiculous. we did mention doubtless -- mention davos. we are going to look at what is on the agenda. business figures fly into the swiss ski resort. plus, we have the market open in hong kong and shanghai. we will have all the opening figures, looking at whether there will be further declines. ♪
>> shanghai is about to open and all indications are for further declines. deflation conversation -- it bends in -- events in davos. and buying a house in sydney has become ever more expensive. we are talking hong kong and what is going on in shanghai. david is looking at whether we are going to see the biggest declines in six years.
being exaggerated in china's financial capital. >> i think we reached our drama quota for the weekend. we could take a few minutes before investors really find out what sort of direction they will be following over the next 30 minutes or so. the shanghai composite -- i was checking some of these stock prices for growth, which really led declines yesterday. it is mixed, but still a fairly clear picture. financial services, down 6.5%. still, really substantial losses. i could go through each name but that is going to take us forever. you get the picture. we are seeing that continue to play out in shanghai. in hong kong, shares are doing
better relatively speaking. we saw sharp drops yesterday for a lot of these names. security -- we're are seeing that rebound a little bit today. they do not see any significant impact on their margin in count -- margin account suspensions. delicacy securities -- talking about sectors. this potential deal for investment coming from the cp group, china citigroup, $8.5 billion -- we will continue to follow that story. shanghai is up of further 1.1%. the philippines is just about getting underway as well. the big one comes out 30 minutes from now am a gdp numbers. we will see if the government did -- well, was able to steer the economy and meet the targets
>> stephen engle is here. what is going to dominate the discussion? i will tell you it is, did you see the swiss franc and isn't everything so expensive? >> how much is this cocktail costing me. $35, that is probably cheap. >> i was at the belvedere website. if you are paying 36 swiss francs for a whiskey shot -- >> do you feel bad for the world
elite? >> considering they have already paid something like $70,000 just to be there -- that is your cheapest membership. i guess maybe the swiss franc is not going to be a big issue. >> if you look at the names of the people, they can afford it. bill and melinda gates can afford it. mr. hollande maybe not. angela merkel can afford it. these are the people getting together. the world leaders get in free. you are on the invite list, so you do not have to pay. they are going to be talking about with the swiss national bank did last week, the surprise shocking move that the founder of the world economic forum told bloomberg news -- he said, i predicted this a week ago, two days before they made the surprising move. he said he could see the clouds on the horizon. he saw with the ecp was going to be doing on the 22nd, perhaps unleashing quantitative easing.
he predicted it but the world markets obviously were surprised about this. there are going to be a lot of reverberations, a lot of discussion points, about many things. but a ripple coming from a stone in the ocean is going to be from what charles schwab had to say. >> today, such a new phenomenon with a complex world, we do not always know the unintended consequences of decision-making. look at the swiss national bank. i think they did not know all consequences the decision will have. so i would say your is at the forefront, but of course our concerns related to china even if i have personally optimistic about china. we do not just focus on a single issue. we are in a world of multiple
challenges. >> what about the unintended consequences -- >> that he just referred to. he was probably not talking about roger federer. but i wanted to bring up roger federer. >> because he is swiss. >> he is flying the us trillion open and he joked with the reporters. he said, i guess this means i really need to win. the aussie dollar and the swiss -- it is down in the last five days about 13.5%. his take-home pay -- she gets paid no matter how well he does. in swiss francs he is taking home less, so he has to work harder. of course he is joking. this is not the unintended consequence schwab is talking about. it is places like denmark, where the danish crown -- a surprise move by the central bank. they cut interest rates.
they want to limit the gains we have seen in the krone. the currency was before the rate cut the highest since 2004. >> the swiss had protection from the european central bank, the danish as opposed to the swiss in regards to this. >> the swiss currency is much more active in local trade than the danish krone. 2013 figures, it it cost about 0.8, less than 1% of global fx trade. that is the krone. but with currencies like the krone -- in copenhagen, whether they would follow suit with the swiss. overnight, the central bank spokesperson said "absolutely not." that is a quote. he said "absolutely not" or thereabouts in swiss.
>> for all of our other top stories, watch us live from wherever you are. download the bloomberg app available in all the major operating systems. let's turn now to some of the other stories which have been making corporate headline so far today. >> the fight for online ad revenue in india is heating up. the "times of india" group plans to acquire a company that takes on google and facebook. they want to buy three or four online services in the annexed months. the plane is to develop services from hollywood music screenings to cricket scores on smartphones. hundreds of job cuts are being planned at dreamworks animation. ceo jeffrey katzenberg made a decision after the box office disappointments of "turbo," " peabody and sherman," and
another series. we are told as many as 16% of employees may lose their jobs. amazon is setting its sights on hollywood after winning a global glow for its dutch golden globe for its series "transparent." it plans to produce a feature this year. the plan will become available on the amazon streaming service eight weeks after appearing in theaters. >> up next they lead by the tens of billions. -- they leave by the tens of billions. were chinese tourists are spending their money. ♪
signs of slowing down -- truths going abroad. it will grow to 200 million tourists in the next few years. -- the next -- how important is the gdp number when you look at tourist numbers? >> we would always like to see gdp growth faster, but it is still growing, still in positive territory. tourism, you still see rising incomes. >> you are saying gdp is up 6%. i am looking at 7% officially. >> in china, gdp is increasing. we look at japan, korea. the trigger point for a massive explosion in travel is 5000 gdp per capita per year. we are looking at that in the next couple of years. that will be one of the key drivers. >> [indiscernible]
this is not my copy, actually. social pressures -- this report is pretty extensive. >> we report the prison will increase to 200 million over the next six years, an average growth rate of 11%. a key driver is rising incomes, easing travel restrictions, and increasingly advertised travel overseas. >> social pressure? >> we published a report about a year ago that the biggest change over the last 12 months has been the rise in social media. 71% of the people we asked have been looking at social media to inspire them for their next travel. 86% of the people surveyed are posting holiday photos on social media. >> other people see it and say i want to go there as well. if you look at hong kong, macao or thailand -- you need to go to
a more exotic location to show your friends you are adventurous. >> the most popular destination right now? >> japan. >> excellent cuisine. tourist friendly. and the currency. >> they use a five foot model to assess the desirability of locations. you look at dining, hotels attractions, visibility, and shopping. japan comes out on top at 77. other countries that score very highly are korea france, and the u.k. hong kong also scores quite high. it comes in at number five. we are saying hong kong is losing market share in the next six years. 41% of people who leave china come to hong kong. >> it is a growing share of a
growing pie. you are saying hong kong is losing its mojo for tourism. >> for a few reasons. first of all, hong kong has done a bad job investing in tourism infrastructure. they have not added a huge number of hotel rooms or attractions. singapore has added gardens by the day and have added formula one. >> when you look at your list singapore is way down on the list. >> the problem we're saying in singapore more recently is that the price of travel has become too high. >> i suppose when it comes it is also accessibility, isn't it? hong kong and japan are very easy to get to. numbers of people coming from the mainland continue to increase. >> hong kong is going to lose
market share. we still expect hong kong to joel -- to grow by 4% in the next six years. we expect it to go from 40 million to 52 million. that is still positive. but the tourist profile is changing. over the last five years, the wealthier people would come to hong kong. now they are going further afield -- to japan, korea, europe. we are seeing lower income people coming into hong kong. >> if hong kong is losing its mojo, what about macao? >> i think macao has gone through a tough patch particularly last year, when revenues declined. we think we are on the cusp of the next golden age for macao. we have eight new casinos opening. >> a lot of different ones opening. >> it is exciting. we have new gaming attractions. and addition of studio city, which is going to include the batman ride.
we are very excited about the non-gaming attractions being added in macao. >> when it comes to leveraging and making money from this there is flying into the hotels the airports. and the hotels the bags you carry. >> in the report we file -- it includes hotel schiller, sydney airport, galaxy, the crown in the philippines -- those are some of our top picks. pure plays on chinese tourism, it is macao names. >> you have a few of them in there. with macao the point is, it is a mass-market again, which is a big winner. >> what is happening in macao at the moment is, companies are spending on these new rejects --
projects, adding a lot of non-gaming attractions. that is affecting the budget. and the next wave of customers is lower spending. returns are coming down significantly, but we see return on invested capital in macao will be 32%, about three times the global average, so we are still positive on macao. >> we're going to look at some of the other stories making headlines around the world. indonesian investigators say there is no evidence the air asia crash was caused by terrorism. they say in initial studies of the flight data recorders show the jet was not brought down deliberately. moore has been recovered from the java sea, although poor weather has halted attempts to raise the fuselage. the u.s. and cuba are preparing for their highest level contact since the 1970's. talks will begin tomorrow. obama and castro plan to improve
bilateral ties. the u.s. has relaxed some trade and travel restrictions, and will review the designation of cuba as a state sponsor of terrorism. the u.s. and north korea concluded two days of unofficial talks in singapore. the special envoy and nuclear negotiator had an extensive exchange of views on atomic policy and ties that had been strained by the sony hack. the united states blames north korea and north korea do dustin isaac. -- denies it. the trail started in 2010, when pyongyang broke into u.s. computer systems terry concerns prompted the nsa to place malware and networks used by hackers. president obama said pyongyang had indeed hacked sony. britain's "guardian" is reporting the u.k. spy agency saved e-mails from the bbc, new
york times, and other news organizations including documents based on edward snowden. gchq says its action meets legal guidelines. the we are going to be looking live to one of the most expensive cities in the world. the latest housing affordable figures are out. and how much you need to buy a property in this place, after a short break. ♪
sydney has the third least affordable housing in the world now, is that correct? >> that is a right. we are just behind vancouver when it comes to on affordability in sydney. 90 9.8 times the median income. last year was a bit crazy. prices rose 14% year on year. there were number of reasons for that. cash rates were at a record low and you could get a great deal. this does get a tax break here extraordinarily, for losing money. they rely on capital gains, not rent, for their payoff. this fuels on affordability -- unafgfofordability. it is an economic powerhouse. buying a house in hong kong will
cost 17 times the median income. auckland is in ninth place, out drinking los angeles. -- out ranking los angeles. >> 98 affordable towns and cities. >> 88 of them is in the united states. leading the pack's detroit. although you might have a bit of trouble finding a job there, or any of the services you may want to enjoy in a city, for the first time in the survey's a 11 year history, there are two cities here in australia. they are carrabba and the home of the super pit, a gigantic gold mine. the report says these appear to be related to resource decreases -- the mining boom is over.
>> you are watching "on the move" live from hong kong. i am rishaad salamat. stocks fluctuating wildly in shanghai after yesterday's deep decline. stocks are done -- on the way down again. heading to dabo swinney warning about the grain gap. gdp numbers coming out of china checking in briefly with the markets.
david? >> a fairly volatile session. what started out as a slow trading session, we are now looking at mostly green. shanghai up over 1%. now spiking above 118. gains across asia. we are at a regional benchmark. volumes are heavy. 60% higher since the turnover compared to what we are used to seeing this time of day. the moment, this is what we have. back to you. >> looking at these gdp numbers being released by chinese authorities, what have we got? >> the numbers flashing on the screen right now gdp coming at 17.3%, better than estimates. basically the same pace of growth as an third quarter. fourth-quarter gdp grew 1.5%
from the third quarter, better than expected. what you are really watching for our details on sect oriole break down. we want to see these numbers go up. the second quarter was 7.5%. >> in terms of what we have with the prediction of the government this time in last year, what are we looking at? >> i want to put across some more figures as they come onto the screen. year to date gdp figures are out now. 7.4% 7.3 percent, remember the government targets are 7.5%. better than expected, closer to the target. this is the slowest annual pace of growth since 1990. what we want to know is how much growth is due to consumption.
we also have industrial output figures that are rising 7.9 percent in december, your and estimates were for 7.4%. we also had fixed asset investment coming in at 15.7 percent, much as estimated. the other thing we are watching for is retail sales. do we see retail sales? anyway, industrial output for the year rose 8.3%, better than expected. overall, the picture is a little bit better than we have expected, a little bit more optimism for some of the government measures that have been put into place. the controlled slowdown seems to be on track. >> anymore on retail? we had a flash on the screen. do we have it?
>> retail sales december, 11 .9 percent. estimates were for a .7%. retail sales 12%, as estimated. a little bit more optimism for how the direction of the economy is going. as you know, consumption is a big factor that the government is watching. it seems, from retail sales, at least, that it is performing a little bit better than people might otherwise think. >> let's get to david now, we are looking at action in the volatile shanghai stocks. >> we are looking at three things. the shanghai composite, 31-50 feet -- 53, we are up. the move up before the numbers came out. the australian dollar, up above
$.82. leading up to the release of those numbers, just below 82 u.s. cents. the dollar yen one 18 earlier, when 1821. very quickly, individual names in china, we will see if there is movement. let's start off with the banks. the big three, eight shares gains across the three. you are looking at mild gains across these three. power producers, petrol china, and on brokerages, we are seeing
that pick up a little bit right now. we will continue to follow that. margin trading, raining and margin trading. back to you. >> with me now is a researcher for jpmorgan. this doesn't deviate much to what we are looking at? >> 7.4, you look at it from the central perspective, it is the first time that chinese are shooting at their annual growth target. it is not surprising that it is relating to xi jinping and the economic restructure. >> surprising data today, the industry production which has been stronger than expected. >> recent volatility, november
is a very soft ip number. we have seen some payback occurring from the week numbers. we look at investment activity industry investment so far has not been reflecting the data yet. it is mainly from the forthcoming investments into 15 and 16. >> steel production january through december, four and a half percent up. slowing down a bit from the amazing figures before. we have to get used to this. and that's the point? >> yes, that is -- >> slower go -- growth, right? if it is 6.8 whatever? >> that is a tabular's rate of growth. >> we should not be surprised or disappointed at 7.4. that is decent growth. it is the highest growth of all the major economies. given the bigger size of china, 7.4, meaning much more than in
the past the other parties as you said, china is talking about the new normal, the economic transition. that means that an overcapacity industry needs to be corrected. we are seeing correction in real estate, correction in the manufacturing industry. that has been driving down in 2014. we think this will remain. the other thing a want to highlight his, although the number is 7.3, the same as for the quarter, we are talking about the celebration of growth. >> nothing out of the ordinary? it is extraordinarily -- extraordinary, but there was an assumption that china would take two to three years to switch to an economy being led by high-tech services and manufacturing. >> that is the target.
we see positive progress in 20 to -- 2014. recent investment has been slowing down from 20% growth to 11-12% growth. that is a positive adjustment process. what is concerning is the implication on growth. not surprisingly, we are going to see further slowed down in economic growth in 2015. >> let's look further ahead. reform will be key. people say the state run enterprise, etc.. what you think should be number one on the list. >> my key focus will be the pricing reform. we are talking about two things. and for it -- interest rate and exchange rate reform. that is a very critical component in pushing for reform.
>> what about reform in the monetary system? today have plenty of scope to do that? they can actually do that with cutting the reserve requirements? >> if you look at the current economic situation the growth momentum is slowing. all the first-quarter numbers are ok, if you look at quarterly dynamics, the economy is slowing. on the other hand, inflation has been very low. 434 months. initial response is, we are expecting rate cuts. the dilemma for the pboc is the structural issues in the transmission. the money is not falling into the right sectors. >> kind of like in some parts of the government, there is a liquidity crunch isn't there? and in other parts, they are flush with liquidity. the margin call yesterday coming through as well it is flush but on the other side we have
small and medium-sized enterprises struggling to borrow money. >> my interpretation of the margin financing is a new liberation, paving the way for more liquidity. keep in mind that before the chinese new year, china needed to inject huge liquidity because of volatility in the liquidity. you want to avoid a situation where liquidity flows and the stock market or flows into the traditional sector. the government is trying to prevent these scenarios from happening. they make sure the money is not flowing into the sectors. then, they are prepared for more liquidity. >> unaware word of the property market. >> the market will continue a downward adjustment in 2015. the momentum will improve. we are expecting some stabilization in the second half of 2015. the big one is we expect the government will ease it there housing policy going forward.
>> two things. what you -- what are you really happy about and what are you unhappy about when it comes to the chinese economy gekko >> in 2014, what made me happy was i saw positive progress on the stock change in the economy. growth is relying less on the investment, and more on consumption in the service sector. one big disappointment is the financial system, distortion in the financial system. >> the implicit -- >> the guarantee. the absence of default for trust products. everybody is risk -- expecting the government will bail out these failed projects. the interest rates in the market is too high. >> it is been great talking to you.
that is pre-much in line, gdp and growth coming in at seven .3%. of course, the government's target was seven a half. let's check in on the other stories making the news today. business and political tickers are heading to the world economic forum in devils. -- davos. there is also greek elections taking place this weekend, and continuing sluggishness in japan. >> the eurozone deflation, look at japan. i mean, the question is, how beautiful defined global -- howdy you define global? the big risk actually, now, is the whole world moves into a cycle of deflation.
>> the australian dollar blackrock says the currency may make it up to 70 u.s. cents. the gdp numbers coming out of china are better than expected. it is, of course, the biggest trading partner for the australians. the dollar getting a bit of a cheer. let's take a look at what blackrock has been saying, this is the lowest of all the people we have been talking to when it comes to that $.70. blackrock laming the commodities structure, the copper and iron yes trillion dollar has tumbled 12% trading at its lowest level in years. preparing for the biggest push to prepare deflation, expected to announce a bond buying program, speculation of the
within the past six months. >> a snowballing effect here where we are seeing oil-funded public spending calling, which is affecting private investment. confidence is falling. it is snowballing. 13 middle eastern countries as well as european countries are being hit. >> russia? >> their economy shrinking 3.5%. for those 13 countries, to gang months ago, -- two months ago, they were supposed to grow. they are not growing as much as thought. saudi arabia slowing, growing 2.8%, the slowest pace since 2009. they will post a budget deficit of 11% of gdp. just in october, they were saying they were going to see a surplus. >> let's look at this part of the world.
what are the producers? malaysia and in the studio is -- sophie, welcome. >> we are expecting the prime minister to outline plans that have to do with the current economic traditions. exporters are seeing a crunch with the decline in oil prices. malaysia is reliant on 30% -- >> we have a budget coming up. >> we do indeed. the assumptions were 100 u.s. dollars per barrel. reality is taking malaysia for a bit of a ride. they must take a look at that assumption and review it. today, we are expecting the prime minister to announce measures to adjust the -- >> half the time you give with
one hand or take with another. or you take with both hands, in times of austerity. what is that thinking? >> when we think about fiscal consolidation and malaysia, the prime minister is committed to, it raises the question, will growth be taking a hit in terms of consolidation, the targets are 3% for 2015. when you look at how the budget is doing and income of $235 billion with expenditures of $273 billion, the gap may be a bit wider. when you think about the type of revisions we have seen across the research gdp will likely come down to below 5%. the official forecast of the government is between five and 6%. could there be a review on the table for gdp forecasts? the prime minister says malaysia is not in economic crisis.
>> there will be a net positive right? >> malaysia is a good exporter, 22% of work -- exports coming from oil and gas. we all consume energy at the end of the day. all sectors, all industries, consuming energy. we are seeing analysts saying 481 surveyed by bloomberg analysts, investors, traders. they are saying this is a net positive. >> the dollar has continued to strengthen. >> that is good news also. this is another trend that is shaping financial markets. there, you see most people saying now that cheap oil is a good thing. 75% see that is a good thing. 72% say they believe this reflects -- not because the global economy is slowing. as you mention, the
strengthening dollar is good news according to 58% of those surveyed saying that the dollar stronger against the yen or euro, is a good thing because it will lift their economy. >> a tiny bit up against the ringgit? >> when you think about the volatility we have seen this morning before the prime minister's economic address, we saw it swiftly decline. looking at the forecast from the analysts some are saying it will weaken against the dollar, 357 by year end. >> it is 358 right now? >> we may reach this 360 level again. conditions might change. again, it is going to hinge on what the government may say today. measures to address economic
>> it is the richest versus the rest as the wealth gap yawns wider. the latest oxfam reports. >> $92 billion added to the world's richest collective fortune. jack ma was the biggest gainer after alibaba -- >> 2016, the richest people in the world will control 50%. >> which means when you look at the numbers, 85 of the world's richest people have the same amount of wealth as 3.5 billion people in this world, which is a dramatic number. again, rising inequality, it was addressed at the world economic forum. we need to have a crackdown from this cap -- these countries, tax dodging of corporations as well as individuals, they want to have more investment in terms of the public sector including health and education. they also want to move or taxes, shift taxes towards capital and
wealth. >> expecting president obama to talk about this to -- in the state of the union? lust china is taking steps? >> obama once to propose a tax on the wealthy. they are raising the top rate tax on capital gains up to 28% an increase of 24%. china, tax officials in beijing are getting to ask citizens to report a earnings overseas. according to some of the reports we have seen. >> eve on -- that was yvonne ma n. the latest gdp figures which came out of china, coming up after the break. ♪
>> china's expansion of the last year was close to the target. stocks in shanghai on monday, shares were up, but that is but a memory. the price of living in sydney is becoming more expensive. breaking news coming through, we have heard the prime minister of malaysia talking, and the country has widened its budget deficit goal. it was 3% of gdp, it is 3.2% now.
the current account -- that is coming from the prime minister. more details throughout the course of the show. getting back to the chinese gdp, let's get it to christine ha with the details. you have had to look at the dust settling. what have we got? >> first, a quick run through of the numbers. fourth quarter gdp grew 7.3%. we were expecting 7.2% maintains the pace of growth. quarter on quarter economy grew one point site -- 1.5%. the full-year gdp growth was brought to 7.4%. this is a bit better than the seven point 3% economists expected. it is closer to the target of 7.5 percent of the year. the bureau statistics is putting
on its website, the chinese economy has realized a new normal of stable growth in 2014. some other details coming out after these figures agricultural production showed a good momentum, one area the government was watching. wages showed a steady increase. inflation wages in 2014 group. inflation remains low. consumer prices went up 2% in 2014, 2.1 percent in urban areas and 1.8 percent in rural areas. low-inflation growth leaves more room for the central bank to move rates and cut requirements. especially since we see decent growth. the bad news is, every time they do something like that, the money they put back into the economy is not quite going to the areas they want. >> that is indeed the case. talk to me about the other day. we had industrial production and
retail sales in the mix. >> december industrial production came out at seven point 9%, estimates were 7.4%. that reflects the stronger picture than people were expecting. in the third quarter it was 7.2%. that is an improvement. four year industrial production is above estimates. december retail sales, 11.9% above the estimates of 11.7% for december. for the full year 12 percent. much as estimated. consumption one of the sectors that government wants to boost. interestingly, online retail sales week -- reached a rise of 14.9% compared to last year. online sales had a big growth
factor in retail. lastly, year to date estimates 15.7%, came in 15.7%. a lot of numbers there. back to you. >> now that china has growth is 7.4% growth enough to support job growth? stephen engle has more on that. is this economy creating the jobs it needs? >> that is always a concern. they set a target and it is somewhat significant that they did not hit the seven and a half percent target set. if you think about it it is setback in the end of 2013, actually for 2015. the communist party, in december, when the target for the next year is actually set, it announced at the national
people's conference in march. then, a lot of things happened. usually, when they set the target, it -- if it is a percent, it will be 8%. this year, they did not hit it. >> not exactly what i call a china bull. >> treadmill to help. >> we know much the chinese economy is going to grow for the rest of the year at the beginning of the year. ask i want to bring up full-screen's to look at the discrepancies between the developing and developed economies of china, and how -- missing the target doesn't really matter because they are in the process of rebalancing. they are trying to get more investment to the west. not surprisingly. if you strip out the municipalities, they are not provinces. they have had better growth. this is third quarter, not fourth quarter. third quarter is a good
indicator. if you look at provincial level guizhou and tibet are at 10.7%. these are regions where there is cheaper labor, people are moving factories into their, it is part of the rebalancing. as for the worst, big industry. i have the richest coming up. heilongjiang, heavy polluting industrysh. anxi, industry. car manufacturing. i lived there 24 years ago, it is not nice. it was an exhaust pipe. these have been underinvested, because these were minas party
strongholds and there has been disinvestment in heavy industry. >> talk to me about the richest. >> beijing, one dam, -- guangdon g 7.6. you came back to the original question about job creation. your guest i asked 10, all these years we were talking about 8%. as the threshold go below that? we will not get job creation. the base effect of the chinese economy has doubled not crippled of a last 10 years. i asked him what is the number enough for job creation? can it be 8%? he said, between six and seven. six and a half is the new magical number. as the economy gets bigger, it is going down as well. it is not panic time yet. >> what have the markets been up to?
david, what is going on? >> with the exception of australia and the malaysian markets, just about every single index in asia is up, to varying degrees. what we are seeing financials are up a 10th of 1%. you have the banks and the brokers and other financial services. you also have oil getting sold off and to a lesser extent mining stocks. oil overnight and into this morning, we see declines. the output is at a record high, 4 million barrels a day is what iraq is pumping out. that is the story in australia. across the region, three other spots here in hong kong. let's shift gears a little bit. away from the gdp story up
seven tons of 1%. should one news agency on what they called the distortion of history there. zte out with earnings, net income rising 24 percent. china resources up one and a half percent. let me wrap things up two of the biggest movers in tokyo this morning, different stories here. ¥3500 for ts tech. melco up 10%, ¥1925. itochu,, the big potential deal
we have been reporting all morning, more details in a bit. one of the companies involved in the potential deal down to an half percent. back to you. >> thanks, david. japan's third-largest trading company, we make be getting new ties with china. we heard about an investment in december. given the absolute pulling we saw in the share price of brokerages yesterday gekko >> obviously, we have been talking about the chinese gdp and there are concerns among investors that maybe gdp numbers are not quite as high as expected. there are two companies, citigroup and topix from thailand, the companies were thinking about putting a quite a
lot of money -- investing incitic one of the biggest conglomerates and china. itochu is meeting right now having a board meeting deciding whether or not to make the final investment. from the information we have, it is pretty much a done deal. cp group and a partner will end ito- and itochu will combine to invest. the initial option is for billion dollars. brokerages and investors concerned that itochu may spend
money on the investment and there will be a lesser expectation for share buybacks which has been a big thing for japanese trading companies over the past year. >> are they new to the chinese market? >> both companies have been there for why they while. cp still has the better ties. -- their owner claims to be the first foreign major investor in china since 1978. cp has been in china since 1979. it has close ties to a lot of industry. intochu has strong ties as well. it helps that the two of them are together. what is important for itochu which made china a core market for future growth, is that it is
hoping to get a strategic alina -- alliance with citic, and connect with more businesses in china, including infrastructural reforms you were talking about earlier the retail markets, the wealthier population spending more on food, more on meat. this is one of the things that cp is good at. itochu is good at retail. they are seeing business opportunities once they have this alliance with citic in place. >> talking about the prospect of growth, we were talking earlier on budget deficit ideas. they cut the growth forecast to foreign a half -- from foreign have percent to five and a half percent.
part of that down, as we have discussed, to the weaker price of oil. crude prices taking its toll on countries's finances. malaysian prime minister says growth is being cut. making corporate headlines, here is yvonne. >> job cuts planned at dreamworks animation. ceo jeffrey katzenberg made the decision after the box office disappointment of turbo. mr. peabody and sherman. the lowest grossing of the madagascar are series. dream work employees -- 16% of dreamworks employees could lose their jobs. after winning a golden globe for its tv series "transparent cohen netflix plans to start production in hollywood. films will be available on amazon video streaming service
for-eight weeks later. netflix is also going into movies. iron ore production increased in rio tinto. stockpiles are growing as demand flows in china. iron ore prices down more than 40% from last year. those are the top corporate headlines this hour. i am yvonne man. >> according to a new survey, the average price in hong kong of a house is 17 times the median income. sydney is not quite in the same league, but it has the third most -- least affordable housing of the world. >> that is right. just behind vancouver. hong kong is out in front, but the affordability ratio in sydney is 9.8% -- 9.8 times
income. there are a few reasons. this is a nice place to live. the cash rate is low, you can get a good deal on mortgages right now. you can also get a tax break for losing money on investment property, which may seem counterintuitive. there are a number of reasons why sydney has become expensive. other cities on the list that may raise eyebrows auckland up to ninth place. houses are not worth as much as they appear to be. l.a. is 10th. new york does not even make the top 10. led by detroit, u.s. cities are some of the most affordable. you may have trouble getting a job there to supply the median income there.
that the central government wants to crack down on the performance of the stock market. i think investors are overreacting to the situation a little bit. i think securities companies and other relevant financial institutions their business will be affected. that is something we need to a knowledge. >> that is the thing here, as well. did you think they are regretting the announcement a it? >> i wouldn't say that. i think people are already expecting to see an announcement in december of last year. some say they were not conducting an investigation, and people would relax and put money in the market again. the market situation has become overheated. >> you have got what, 50% increase in six months?
the composites there in shanghai, it is a bit of a -- >> it is highly unhealthy. if you want to the bulk market to maintain, you have to do something. >> this is the point we were talking about. rather than for a crisis to develop and have a knee-jerk reaction, it is better to act preempt -- preemptively. >> yes, it is a little bit overreacting. people are scared. some of the investors need to take hold of their portfolios because of the new rules coming up. i think the market will be adjusting in the next few months. also, i don't think the market will go back to an increasing stage. we need to see the policies from the government. >> what happens next? as we see a bit of steam and froth being removed up the market. >> i think the government is
growing and we have a healthy stock market. as the chinese new year approaches, the regulators will react -- relax the market a little bit. the investors may restore confidence in the market will be performing. >> quickly, a bounce back before the shanghai market, what do you make of it? >> the gdp figures are better than expected. we expected 7.1 or 7.2, it turned out to be 7.3. for the whole year, it is slightly below the target of 7.5, but now it is some .4. i think that is except the all. something i think we needed to look at. in the last quarter, it pushed up. some of the factors, for this year, we have yet to see where the performance of the market will remains for -- remain
>> we will check out the headlines around the world. take a look at indonesian investigators, they say there is no evidence that the airaasia plane was brought down deliberately. two more bodies have been recovered from the java sea. most of the remaining victims are probably in the wreckage, but the weather is too bad to raise the fuselage. the u.s. and cuba are preparing for their highest level of contact since the 1970's. talks will begin tomorrow after president obama and roll castro
what --raoul castro met and considered strengthen ties. the trail leading to the sony hack leads to 2010, when the u.s. broken to pyongyang pass's government computers. pyongyang had indeed hacked sony. written'-- e-mails from the bbc the new york times, and other news organizations were kept by -- messages among 70000 e-mails collected in just 10 minutes in 20 -- 2008.
>> it is the middle of the asian trading day. there is a live look at this new ferris wheel in our skyline in hong kong. we are live and this is "asia edge." >> from tumbled to rally. stocks have turned around in shanghai. helping the market -- gdp data from china that was close to expectations. a disappointing forecast from malaysia where chief oil is
having -- cheap oil is having an adverse effect. >> the imf should be releasing its outlook for the global economy. plus, the movers and shakers in davos. lots to think about at the world economic forum. we see what is topping the agenda. and the richest versus the rest. warnings that the top you will soon control half of the globe's wealth. that is all coming up in this hour of "asia edge." >> what we are seeing is a day when the dollar is stronger. equities are rising. we are looking at gains led by japan, hong kong and shanghai. what else are we watching across the markets? malaysia and australia, the usual laggards. nothing special there. australia oil prices